Cigna Corporate-Owned Life Insurance Case Study

Using a Policy Administration System to Streamline Processing

Cigna Corp., is a global health services company with more than 30,000 employees and 75 million customer relationships worldwide.

Its corporate insurance business, Cigna Corporate Insurance, has dealt in corporate-owned life insurance (COLI), bank-owned life insurance (BOLI) and similar products since 1983. Cigna Corporate Insurance has more than $6 billion in policy cash values for 250+ corporate clients.

Since the mid-2000s, Cigna has contracted with Andesa Services, Inc., for the administration of several blocks of COLI and BOLI business. Using Andesa’s integrated, AFAS policy administration system allowed Cigna to retire legacy systems and streamline processing. In addition, Andesa’s responsiveness and understanding of regulatory issues has helped Cigna Corporate Insurance to stay nimble and flexible and deliver best-in-breed client service.

Overcoming Inefficiencies in Maintaining and Testing Several Systems

By the mid-2000s, Cigna Corporate Insurance was at a crossroads. Like many large carriers, the company had developed several policy administration systems over the years—each with its own technical support requirements. As time went on, regulatory changes mounted, products changed and evolved and market requirements shifted. As a result, it had become increasingly inefficient for Cigna to maintain and test several internal systems.

After extensive review, Cigna elected to convert its variable universal life (VUL) and corporate universal life (CUL) blocks to a third-party system, while maintaining its other lines of business on internal systems.

Criteria for a Flexible Application Service Provider

The third-party application service provider (ASP) ultimately selected by Cigna would need flexibility and expertise to succeed in the complex and dynamic COLI and BOLI marketplace. The timetable for the conversion was tight, and complicated by the fact that Cigna planned to retain its existing illustration system and tax compliance testing methodologies. Despite these complications, integration among the systems needed to be seamless.

A thorough review of ASPs with the relevant expertise led Cigna to Andesa Services, a leading provider of policy and plan administration services headquartered in Allentown, PA. Cigna executives were impressed with the expertise of Andesa’s staff, as well as the firm’s experience handling the kind of extensive customization that would be required to convert and administer Cigna’s business. The companies soon entered into an agreement to move Cigna’s VUL and CUL blocks to Andesa’s AFAS policy administration system.

Converting the Variable Block and CUL Block

Andesa agreed to a demanding conversion schedule to its AFAS platform. The first conversion, of Cigna’s variable block, was “complicated” as expected, Cigna Corporate Insurance Senior Vice President Robert F. Clark said, “but Andesa did an excellent job in coming up to speed on our products and legacy systems, and developed a good working relationship with our internal team.”

After the variable block was successfully converted, Andesa embarked on the conversion of the CUL block. These conversions also involved Andesa developing tax compliance logic to exactly match Cigna’s existing tax module, and to integrate its function with Andesa’s policy administration system. This was created in Java and is used to support the tax compliance testing needs of all the lines of business.

Benefits of a Singular Policy Administration System

Meanwhile, as the CUL block was being converted, Cigna began to realize the benefits of having its variable block of business on Andesa’s system. “The flexibility of using Andesa made a lot of sense,” Clark said. “Andesa provided us with a solution that enabled us to leverage the common elements across multiple lines of business.” As a result, Cigna soon decided to convert its other lines of business to Andesa as well, enabling it to sunset all its internal systems and enjoy a singular policy administration platform – a rare situation for a large, experienced carrier. Cigna later added two more blocks from a separate division to further leverage the capabilities of the system.

“It’s worked out the way we hoped,” Clark said. “When issues arise, we’re able to quickly re-prioritize to accommodate changes in a sensible way. Andesa, in my mind, exemplifies how a business partnership should work. They’re certainly interested in our success – the more successful we are at maintaining our business, the better it is for them. All in all, things have worked out very well.”

A Collaborative Partnership that Improves Business Results

Andesa has proved to be a valuable relationship for Cigna. Its network of clients and connections across the industry has allowed Andesa to stay current with and interpret marketplace developments. Cigna’s association with Andesa has helped it solidify relationships with key brokers and consultants. “It’s very efficient for us to leverage Andesa’s scale and technology infrastructure,” Clark said. “Their technology has helped us deliver exceptional service to our brokers and clients.”

Perhaps most importantly, the collaborative relationship with Andesa is reflected in the business results. “Our retention rate has been consistently very strong,” Clark said. “The fact that our service is complemented by Andesa technology helps us meet the needs and deliver on promises to our clients and brokers. It reinforces our confidence that we can address the complex and rapidly changing service demands of our business.”

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“Andesa works to meet all timelines and shows a committed effort to helping the customer.”

“Andesa has flexible systems and a knowledgeable and responsive staff.”

“Issuing policies in bulk is a real pleasure.”

“Thank you to the Andesa team for an exceptional job done with the conversion.”

“Andesa has many talented and professional staff members. They are quick to respond to issues and work hard to resolve them.”

“The Andesa staff is exceptional. They have helped me and my team tremendously over the past year.”

“Andesa approaches the engagement in the spirit of a true partnership.”

“The client service at Andesa continues to blow my expectations out of the water. They are knowledgeable, responsive and could not possibly deliver better service to me and my team.”

“We’ve had a very successful first week on the Andesa system. Associates are feeling upbeat, have provided extremely positive feedback, and are impressed with the ease of use and accurate processing.”

“Andesa has a client-oriented staff that can adapt to our business needs and is willing to think outside the box.”

“We can change priorities quickly and Andesa is able to react as needed. Andesa is always looking for ways to improve the solutions they offer.”

“Andesa is continually thinking of ways to make our jobs easier.”

“Andesa, in my mind, exemplifies how a business partnership should work. They’re certainly interested in our success – the more successful we are at maintaining our business, the better it is for them.”

“Andesa gave us good solutions that we can use — or our clients can use — to make the whole process better.”

“Andesa does a great job of recovering and reacting. Any time I have ever had a critical need, it was addressed immediately.”

“I like the fact that the Andesa Policy Administration system lets me find all relevant information on one page, rather than 100 screens. It’s a lot easier.”

“The Andesa Policy Administration system is a big improvement from our old system.”

“The Andesa Policy Administration system makes more reporting data readily available. It is also much easier to run a report at any level, and get all the groups and sub groups.”

“Andesa has been outstanding in working through the challenges with respect to our project. I am particularly impressed by the ability to problem solve and deliver on commitments.”

“We appreciate the partner relationship that we have with Andesa, rather than a typical vendor and client business arrangement.”